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Innovation Center Report Eyes Two Tennessee Metros

GIVE grants boost vocational education programs in rural counties.

Carvana opened its newest car vending machine in Memphis in November 2019. Another can be found near Nashville.

PHOTO COURTESY OF CARVANA

by MARK AREND

Knoxville and Nashville are among 35 metro areas named in a recent Brookings report as having the potential to become one of America’s next high-tech innovation centers. “The Case for Growth Centers: How to Spread Tech Innovation Across America,” from the Brookings Metropolitan Policy Program and the Information Technology & Innovation Foundation (ITIF), argues that it’s time for the federal government to take aggressive steps to counter the nation’s epidemic of regional division and avoid ceding its innovation lead to China.

The U.S. innovation economy is concentrated in too few locations, such as Silicon Valley, Boston and Seattle, creating a “winner-take-most” dynamic, the report asserts. The result is not only increasing regional inequality and lost opportunity in the heartland, but reduced U.S. competitiveness as well.

“America’s successful tech hubs haven’t emerged by accident — most are products of deliberate policy choices and federal government support,” says Robert D. Atkinson, report co-author and president of ITIF. “The neoclassical economics idea that markets can be left to drive innovation has instead left the heartland behind. A strong federal effort focused on helping some metros transition into self-sustaining tech hubs can help more Americans benefit from the significant opportunities enabled by high-tech industry growth.”

Adds Mark Muro, co-author and Brookings Metro senior fellow and policy director: “The nation’s tech-driven spatial divides have reached emergency status and won’t resolve themselves on their own. It’s time for the nation to push back against these trends and conduct a major experiment to see if we can help eight to 10 promising metros emerge as really dynamic anchors of growth in the nation’s heartland.”

“America’s successful tech hubs haven’t emerged by accident — most are products of deliberate policy choices and federal government support.”

The authors urge the federal government to intervene in part because the resources states and cities can bring to bear are limited. How? By creating eight to 10 new regional “growth centers” across the heartland. Central to this package will be a direct R&D funding surge worth up to $700 million a year in each metro area for 10 years; other inputs, including an antitrust exemption for firms to collaborate on location decisions, are also critical. A rough estimate of the cost of such a program suggests that a growth centers surge focused on 10 metro areas would cost the federal government on the order of $100 billion over 10 years. That is substantially less than the 10-year cost of U.S. fossil fuel subsidies.

In November, Governor Bill Lee announced projects receiving funding through the Governor’s Investment in Vocational Education (GIVE) program, which prioritizes learning opportunities in rural counties and enhances career and technical education statewide. In February 2019, the General Assembly approved $25 million in the governor’s budget to incentivize collaboration at the local level among stakeholders such as higher education institutions, K-12 and economic development partners.

“We are proud to work with the General Assembly to pass the GIVE initiative and expand career and technical education for Tennessee students,” said Lee. “These funds directly support our workforce development efforts in distressed and at-risk counties and are a key component of our strategy to prioritize rural Tennessee.”

The award process began in June when the Tennessee Higher Education Commission issued a competitive Request for Proposals (RFP). Each proposal was required to show local data that clearly identified both workforce needs and a sustainable plan using equipment, work-based learning experiences or recognized industry certifications to increase the state’s competitiveness and postsecondary attainment goals. Grants range in value from $111,000 to $1 million.

Sample recipients include $310,000 for a welding program expansion at the Tennessee College of Applied Technology (TCAT) Pulaski, $1 million for a diesel maintenance program at TCAT Livingston and just under $1 million for the Advanced Technologies Apprenticeship Institute at Cleveland State Community College.

The program prioritized economically distressed and at-risk counties in the RFP process. The 28 funded projects will serve all 15 economically distressed counties and 18 of the 24 at-risk counties.

The Appalachian Regional Commission index of economic status categorizes counties as at-risk or distressed based upon their three-year average unemployment rate, per capita market income and poverty rates. Distressed counties rank among the 10% most economically distressed in the nation while at-risk counties rank between the bottom 10% and 25% of the nation’s counties.

Recent Volunteer State Capital Investment Projects

Mueller Water Products will expand its Tennessee presence and locate new operations in Marion County. The project will create up to 325 new jobs in Kimball over the next five years. The company manufactures and markets products and services used in the transmission, distribution and measurement of water in North America. The company’s portfolio includes engineered valves, fire hydrants, pipe connection and repair products, metering products, leak detection and pipe condition assessment. Mueller plans to establish manufacturing operations in an existing 233,000-sq.-ft. facility in Marion County.

“The new location in Marion County supports the expansion of our manufacturing capabilities around our Chattanooga operations,” says CEO Scott Hall. “As our customers increase their focus on products made in America, the Kimball facility will allow us to manufacture products like large valves that are in demand by water utilities.”

Mersen, a global provider of electrical power and advanced materials headquartered in France, will invest up to $65 million over time to establish operations in Columbia. It will create approximately 100 jobs in Maury County. The company will acquire and renovate part of a former industrial building in Columbia. Mersen anticipates the plant will be operational in the second half of 2020.

“Given today’s particularly buoyant market, our goal at Mersen is to find the additional graphite production capacities that we need to satisfy market demands from 2020 onwards,” says Eric Guajioty, vice president of advanced materials. “With the quality of the assets there allowing a gradual investment, this acquisition is indeed an excellent opportunity to ramp-up our business in line with market dynamics while providing our Group with a new competitive advantage on certain materials that we purchase currently from outside vendors.”

DEVCON plans to expand its operations and locate its headquarters in Memphis. It will invest $2.4 million and create 161 new jobs in Shelby County. DEVCON is a cybersecurity software company providing edge security for corporate enterprise banks, e-commerce and major brands. DEVCON is the first company to offer real-time, security solutions to defend against data breaches, Magecart attacks, malware and exploitation of third-party JavaScript.

“Memphis has more female-owned businesses percentage-wise than any other major city, and for me, as a female entrepreneur and CEO, this is the ideal community in which to grow even more opportunities for women,” says CEO Maggie Louie.

Nippon Paint (USA) Inc. will invest approximately $60 million to establish a facility in Chattanooga, where it will create 150 jobs over the next five to seven years. A wholly owned subsidiary of Japan-based Nippon Paint Holdings Co., Ltd., Nippon Paint (USA) Inc. and its subsidiaries manufacture and distribute paints and coatings for the architectural, automotive and industrial coatings markets. The company will construct a 270,000-sq.-ft. facility in Chattanooga, where it will produce automotive E-Coat and topcoat.

“The new manufacturing facility in Chattanooga is a key component of our strategic expansion plans for the Americas,” says CEO Tetsuro Fujita. “Nippon Paint (USA) looks forward to bringing E-Coat production to the U.S. and expanding our paint and coating product offerings to our valuable automotive customers in the U.S., Canada and Mexico.”

Mark ArendEditor in Chief of Site Selection magazine

Mark Arend has been editor in chief of Site Selection magazine since 2001. Prior to joining the editorial staff in 1997, he worked for 10 years in New York City at Wall Street Computer Review, ABA Banking Journal and Global Investment Technology. Mark graduated from the University of Hartford (Conn.) in 1985 and lives near Atlanta, Georgia.